Are Indian viewers ready to pay for ad-free TV channels?

Between 2010 and 2013, around five million people in the US are said to have switched from their normal cable TV to watching TV online and ad-free content, say media reports.

In India however, most channels follow a model based on both advertising as well as subscription revenues. There are only a couple of channels that offer content without advertisements.

HBO’s two premium channels HBO Defined and HBO Hits are the only ones that currently follow the ad-free model. Launched in February last year, the channels are available in SD (standard definition) version and HD and priced at Rs 99 per month for the HD combo pack and Rs 79 per month for the SD channels combo pack. Their aim is to reach 100 million subscribers in three to five years.

Speaking about this, Monica Tata, HBO said, “For the first time Indian audiences actually have an opportunity to pay for premium content. In all honesty, we were available on all platforms only early this year. Within a year we have grown almost seven to eight times our overall growth of subscription. So it’s been a very encouraging and overwhelming response from the audiences.”

With a target audience of 15-45 year Male/Female in SEC AB English viewer markets, it is now available across the country. Though viewers in metros are their key target audience, Tata says these channels are growing in popularity in smaller cities as well. “We were very surprised when some of our platforms shared that a large number of the audience is from Chandigarh, Pune and Lucknow. These may be not in the key five metros but are important,” she said.

So there is definitely traction, indicating that Indian viewers are ready pay for ad free content. But what do other broadcasters think of channels with ad free content?

According to Sangeetha Aiyer, History TV18, “Content consumption and with it consumer habits are changing every day. The existing ecosystem will not remain the same in the next few years - change may come much sooner than expected. Who will eventually pay for the content? What are the contours of this new era? How will the ecosystem work? These are questions only time can answer. My gut feeling is that consumers will be willing to pay a lot more for ad-free content- and we're already seeing this happen across the board.”

Nikhil Madhok, Marketing Head, Star India says the discerning audience wants customized content. “And they are willing to pay a premium for it so that they can watch it without commercial advertisement. That number whether it is online or on television is still small. But going forward I think it will become bigger,” he said, citing the examples of the HD channels, Star World premier, where people get to watch the content the same as in the US and Netflicks. “Whoever is creating the content will be able to offer it ad free, based on subscription,” he said about the future of premium content.

Pradeep Hejmadi, Business Head, Zee TV however feels that running a channel entirely on subscriptions is a bit tricky in India today. “Quite a few of the HD channels have started carrying advertising anyway, even though the quantum of advertisement is much lower. Would a viewer like to watch content without any ad? I am sure he would. But does the market place as an economy provide a sustainable business model to run content without any ads whatsoever? It’s a bit tricky,” he remarked. Hejmadi explained that acquisition based content will need advertisements during the time the series is aired, but it is very difficult to manage a business plan if the costs are running on a per day basis. “Then either the consumers have to come forward and pay that kind of money to be able to offset that cost, or the channel has to come up with a hybrid model of advertising and subscription. Currently the model is a hybrid one, but in the future if the whole value system reorients itself for content creators, content providers and distributors, then it would be more viable for such content to be created,” he explained.

Tata did a spot of crystal gazing as well and struck an optimistic note. “It’s a beginning. It needs to make business sense. So while right now it is still early days, as we go along we learn what are the best ways to make this proposition a successful one. At the end of the day content is of course critical, but experience is also important - which is what these two channels are highlighting. It is the experience of watching good content that is ad free, and also you get a lot of HBO originals, which is again a huge draw for the audiences. Something that was not available on HBO basic.”

The future may hold promise and potential for subscription based content, but the present is geared towards a mix of advertising and subscription. Despite the interest in premium content created solely for subscribers and provided ad free, it could well be a while before it is adopted in India.